EVIDENCE OF 'EVERGREENING' IN SECONDARY PATENTING OF BLOCKBUSTER DRUGS.

• Date: 01 December 2020
• Author: Christie, Andrew F.

CONTENTS I Introduction II Method A Identification of Drugs and Associated Secondary Patents B Classification of Secondary Patents C Relative Timing of Secondary Patent Applications D Analysis III Results A Numbers and Owners of Secondary Patents B Timing of Applications for Secondary Patents C Duration of Secondary Patents IV Discussion A Numbers and Owners of Secondary Patents B Timing of Applications for Secondary Patents C Duration of Secondary Patents D Limitations V Conclusion I INTRODUCTION

The high and rapidly rising cost of pharmaceuticals is a phenomenon of concern in many countries. (1) In the search for cost drivers, the marketplace monopoly conferred by patents, particularly on high-cost, high-selling ('blockbuster') drugs, has been a popular target. (2) While there is substantial literature on pharmaceutical patenting strategies generally, (3) comparatively few studies have empirically analysed the actual patents granted in relation to specific drugs; of those that do, none of which we are aware have compared the characteristics of the patents granted to the inventors of blockbuster drugs with those granted to their competitors and third parties in relation to those drugs. (4)

In an earlier study we sought to improve the baseline understanding of patenting behaviour by identifying and analysing all of the patents associated with the 15 drugs responsible for the largest cumulative expenditures in Australia over the last 20 years. (5) We found that there was a mean of 49 (median of 45) patents associated with each drug. Surprisingly, three-quarters of these patents were owned by an entity other than the originator of the drug. Almost all of the patents we identified were 'secondary patents'; that is, they related to the high-cost drug in the study sample, but did not claim the active pharmaceutical ingredient ('API') of the drug in their own right. Examples of the inventions covered by such secondary patents are means for formulating the API, mechanisms for delivering the API, and methods of medical treatment using the API (whether for the same or a different condition for which the API first received regulatory approval). Patents on such inventions are 'secondary' in the sense that they are granted subsequent to the grant of the primary patent over the drug's API, (6) and are for 'follow-on innovation' in the sense that they are for variations or applications of the API.

Understanding the nature of secondary patents has direct relevance to policy concerns over drug prices. Many commentators worry that producers of blockbuster drugs use secondary patents to obtain a de facto monopoly over the drug in the marketplace after the de jure monopoly conferred by the original patent over the API expires, thereby enabling them to keep prices high--one of the practices colloquially referred to as 'evergreening' of exclusivity. (7) In particular, there is concern that, towards the end of the life of the patent over the API, the drug originator introduces a new version of the drug (eg a slow-release formulation) which incorporates an innovation protected by a secondary patent, and encourages doctors to switch to prescribing the new version as being an improvement. By the time the API patent expires, the new version will have become the standard. Although competitors are free to make the API, the secondary patent precludes them from making the API with the improvement --with the result that the drug originator maintains exclusivity in the marketplace for supplying the drug. (8)

A recent report on drug costs from the National Academies of Sciences, Engineering, and Medicine in the United States ('US') determined that such evergreening of exclusivity through secondary patents adversely affects consumers, and recommended that the US Patent and Trademark Office 'identify specific means to reduce "evergreening" of drug exclusivity' via secondary patents. (9) The Australian government's independent economic research and advisory body, the Productivity Commission, has taken a similar view. (10)

A surprising finding from our previous study was that, of the large number of secondary patents granted for blockbuster drugs, the majority of them were granted to entities other than the originator of the drug. (11) That type of patenting activity does not fit the classic notion of evergreening through secondary patenting. (12) In this study, we delve more deeply into those secondary patents. Specifically, we examine by whom and when the applications for them were filed, and for how long these secondary patents were maintained. Unlike prior studies, we consider secondary patents granted to any person, not just to the originator of the API with which they are associated. (13) Knowing who owns secondary patents associated with high-cost drugs is important because the identity of the patent owner determines the potential for the secondary patents to have an evergreening effect. We are able to compare characteristics of secondary patents that raise the spectre of evergreening because they are obtained by the originator of the API, with characteristics of secondary patents which cannot have this effect (under the conventional conception of evergreening) because they are obtained by others.

II METHOD

A Identification of Drugs and Associated Secondary Patents

We used the Australian Statistics on Medicines series (14) to identify a sample of the costliest drugs in Australia. Specifically, from among all drugs sold in Australia, we identified the 20 that accounted for the highest cumulative expenditures during the period 1990-2000. We chose high-cost drugs from an earlier period because patents for such drugs typically last for 20 years (15) (or even more), (16) and we wished to observe patenting behaviours that occurred well after the expiry of the original patent on those drugs. Using publicly accessible databases, including the Merck Index, (17) PATSTAT, (18) INPADOC, (19) and AusPat, (20) we identified for all but two of those drugs the patent on the drug's API ('API patent') that was granted in Australia. (21) Of the remaining 18 drugs, we excluded five, the granted API patent of which had not expired by 31 December 2005 because there was insufficient time to observe post-expiration secondary patenting activity for those drugs. This left 13 drugs in our sample.

Our method for identifying the API patent for each drug, as well as all granted secondary patents associated with the drug, is described in detail in our earlier study. (22) Here, we recap the procedures for identifying and classifying the secondary patents. To determine which patents among the large number that named the APIs of interest were secondary patents, we obtained and examined the text of all published Australian patent specifications from public sources. Our examination focused on claim one in the patent specification. Claim one typically represents the broadest claim in a patent, and encompasses the fundamental concept of the invention. Thus, if claim one of a patent is not associated with a drug in our sample then it is almost certain that no other claim of that patent will be. We defined a patent as 'associated' with a sampled drug if claim one had an integer (ie an element of the claimed subject matter) that covered, or 'read onto', the API of the drug. Determining the subject matter that an integer of a claim covers is an objective assessment routinely undertaken by patent lawyers and patent attorneys (and our research team had one of each).

Table 1 lists the 13 drugs in our sample by their International Nonproprietary Name ('INN') and Anatomical Therapeutic Chemical ('ATC') classification. (23) The table also shows the total cumulative expenditure on each drug in Australia between 1991-2008, the owner of the drug's API patent, and the number of secondary patents granted on that drug in Australia up to August 2010. To facilitate subsequent analyses, we grouped the 13 drugs into categories based on their total cumulative expenditure. Four categories were determined, using the 'Jenks optimization' method to identify natural break points in the expenditure totals, and are shown in Table 1. (24)

B Classification of Secondary Patents

The secondary patents for each drug in the sample were classified along two dimensions: the type of invention they protected and the nature of the company that owned them.

Determinations of the type of invention were based on the text of claim one of the secondary patent. As previously described, our final taxonomy consisted of six mutually exclusive categories: (25)

1 an intermediate or a different form of the API (eg an isomer, or a salt or crystalline form, of the drug's chemical compound);

2 a combination of the API, or an intermediate or a different form of it, with another drug (eg the drug's chemical compound combined with the chemical compound of another drug);

3 a delivery mechanism or a formulation for the API, or an intermediate or a different form of it (eg a transdermal patch containing, or a slow-release formulation of, the drug's chemical compound);

4 a process for making or formulating the API, or an intermediate or a different form of it (eg a method of preparing or purifying the drug's chemical compound);

5 a method of treatment using the API, or an intermediate or a different form of it, for an indication in an ATC class the same as the ATC class of the indication for which the relevant sample drug was listed for government subsidy (eg a method of treating asthma using a drug that was subsidised for treatment of obstructive airway disease); and

6 a method of treatment using the API, or an intermediate or a different form of it, for an indication in an ATC class different from the ATC class of the indication for which the relevant sample drug was listed for government subsidy (eg a method of treating obesity using a drug that was subsidised for treatment of depression). (26)

Classifying the owners...